This publication presents results, in respect of the 1999–2000 financial year, from an Australian Bureau of Statistics (ABS) survey of employing businesses involved in the veterinary services industry. It is the first ABS survey of this industry.

COMMENTS ON THIS PUBLICATIONThe ABS welcomes comments and suggestions from users recommending industries and data items for inclusion in future surveys. These comments should be addressed to the Director, Service Industries Surveys, Australian Bureau of Statistics, PO Box 10 Belconnen ACT 2616.

ROUNDING

Where figures have been rounded discrepancies may occur between the sum of component items and the total.

SUMMARY OF FINDINGS

INTRODUCTION

This publication presents results, in respect of the 1999-2000 financial year, from an Australian Bureau of Statistics (ABS) sample survey of employing private veterinary practices. These practices are classified to Class 8640, Veterinary Services, of the Australian and New Zealand Standard Industrial Classification (ANZSIC).

Practices can be formed in various ways. In its simplest form, the veterinary practice is a single business. In more complex situations, there is an administrative services business providing administrative, secretarial or similar services to the veterinary business. In these cases, data for the administrative services business and the veterinary business have been combined to form the practice.

SIZE OF THE INDUSTRY

At the end of June 2000, there were 1,792 employing practices operating in the veterinary services industry. These practices operated from a total of 2,325 locations, with locations in capital cities and country areas being evenly distributed at 1,153 and 1,172 respectively. Sole proprietorships and partnerships accounted for 801 (45%) of veterinary practices, while there were 744 (42%) practices operating as incorporated companies.

Industry Value Added for employing businesses in the veterinary services industry in 1999-2000 was $549 million, compared to Industry Value Added for all industries of $365,900 million.

Although non-employing practices were not included in the survey, it is estimated from external sources that there were a further 790 non-employing veterinary practices in the veterinary services industry. These non-employing practices generated only $86 million in income.

SOURCES OF INCOME

The total income of employing veterinary practices during 1999-2000 was $994 million.

Income from the provision of professional services ($865 million) was the main source of income for these practices and represented 87% of their total income. This professional service income included $229 million from consultation services and $204 million from the provision of medication used as part of the treatment. These two types of professional service income accounted for 23% and 21% respectively of total income. Other professional service income included $110 million from surgery and $97 million from vaccinations.

Income from the treatment of companion animals ($714 million) accounted for 83% of the professional services income. Most of the remaining income was generated from the treatment of farm production animals ($83 million), racehorse breeding ($30 million), and treatment of animals in the horse and dog racing industry ($29 million).

Income from other veterinary related services totalled $25 million and included such services as grooming ($8 million), boarding ($7 million), and burial and body disposal ($5 million).

Another source of income for veterinary practices was the sale of merchandise at $96 million. The main types of merchandise sold during 1999-2000 were over the counter medications ($62 million), pet food ($19 million) and pet accessories ($8 million).

EXPENSES

Veterinary practices incurred total expenses of $836 million during 1999-2000. The two major expense items were labour costs of $354 million (42% of total expenses) and purchases of $266 million (32% of total expenses).

Wages and salaries of $312 million was the most significant component of labour costs, with employed veterinarians being paid wages and salaries of $169 million. The average wages and salaries per employed veterinarian practitioner was $52,200. The remaining employees in veterinary practices were paid total wages and salaries of $143 million, which resulted in an average wages and salaries per employee of $27,300.

The most significant purchases made by veterinary practices were on goods and medications for resale at $244 million, which represented 29% of total expenses. Other major expenses for veterinary practices were rent, leasing and hiring expenses ($45 million), payments for other medical services such as pathology/laboratory, x-ray services, etc. ($25 million), motor vehicle running expenses ($16 million), and telecommunication services ($12 million).

PROFITABILITY

The veterinary services industry recorded an operating profit before tax of $159 million during 1999-2000, which represented an operating profit margin of 16.0%. The operating profit margin did not vary greatly by size of practice, with practices with 3 to 4 practitioners and practices with 5 or more practitioners recording an operating profit margin of about 17%, while practices with 2 practitioners recorded 12.7%.

During 1999-2000, the return to practitioner (defined as wages and salaries paid to practitioners, plus operating profit before tax of practices, divided by the number of practitioners) in the veterinary services industry was $68,600. The return to practitioner varied according to practice size with the return for single practitioner practices being $84,900, while the return to practitioner for practices with 5 or more practitioners was $60,900.

EMPLOYMENT

There were 13,218 persons working in the veterinary services industry at the end of June 2000. Permanent employees totalled 8,489 and accounted for 64% of total employment, with permanent full-time employees and permanent part-time employees accounting for 5,732 persons and 2,757 persons respectively. The remaining employment comprised 1,797 working proprietors and partners and 2,933 casuals.

While females accounted for 73% (9,646 persons) of the persons working in the industry, and 77% of the permanent employees, only 41% of total veterinary practitioners were females.

Of the 13,218 persons working in the veterinary service industry, veterinarian general practitioners (4,513 persons) were 34% of total employment and veterinarian specialists (265 persons) were 2% of total employment. Nurses (5,667 persons) accounted for 43% of employment, of whom 97% were females.

STATES AND TERRITORIES

Veterinary practices in New South Wales (573 practices) and Victoria (451 practices) accounted for 57% of all veterinary practices.

Practices in New South Wales accounted for 30% of employment, 35% of industry income and 38% of operating profit before tax of the industry. The return per practitioner in New South Wales practices was $81,400. Practices in Victoria accounted for 27% of employment, 26% of income and 31% of operating profit before tax of the industry. The return per practitioner in Victorian practices was $68,100. By way of comparison, the New South Wales and Victorian share of the Australian population at the end of June 2000 was 34% and 25% respectively.

There were only 18 employing practices in the Australian Capital Territory which accounted for the highest return to practitioner ($98,100) and also the highest operating profit margin of 21.7%. The operating profit margin was lowest for practices located in the Northern Territory (10.4%) and Queensland (9.2%).

PRACTICE SIZE

Of the 1,792 veterinary practices at the end of June 2000, 522 (29%) were single practitioner practices. These single veterinary practices accounted for 14% of industry employment, 15% of total industry income, and 15% of operating profit before tax. These small practices generated 71% of their income from the treatment of companion animals and 13% from farm/production animals.

There were 238 (13%) practices with five or more veterinarians, contributing 29% of industry employment, 28% of total industry income, and 29% of operating profit before tax. These large practices generated 67% of their income from the treatment of companion animals and 9% from farm/production animals.

EXPLANATORY NOTES

INTRODUCTION

1 This publication presents results, in respect of 1999–00, from an Australian Bureau of Statistics (ABS) sample survey of 366 employing practices in the veterinary services industry.

SCOPE

2 The scope of the survey was all employing businesses recorded on the ABS business register and classified to Class 8640, Veterinary Services, of the Australian and New Zealand Standard Industrial Classification (ANZSIC). This class comprises businesses of registered veterinary practitioners and also includes businesses mainly engaged in operating animal hospitals.

IMPROVEMENTS TO COVERAGE

3 Data in this publication have been adjusted to allow for lags in processing new businesses to the ABS business register, and the omission of some businesses from the business register. The majority of businesses affected and to which the adjustments apply are small in size.

4 Adjustments have been made to include new businesses in the estimates in the periods in which they commenced operations, rather than when they were processed to the business register.

5 Further adjustments have been made for businesses which had been in existence for several years, but, for various reasons, were not previously added to the ABS register.

6 For more information on these adjustments, please refer to the ABS publication Information Paper: Improvements to ABS Economic Statistics, 1997 (Cat. 1357.0).

STATISTICAL UNIT

7 Generally the unit for which statistics were reported in the survey was the management unit. The management unit is the highest-level accounting unit within a business or organisation, having regard for industry homogeneity, for which accounts are maintained. In nearly all cases it coincides with the legal entity owning the business (i.e. company, partnership, trust, sole operator, etc.). In the case of large diversified businesses, however, there may be more than one management unit, each coinciding with a 'division' or 'line of business'. A division or line of business is recognised where separate and comprehensive accounts are compiled for it.

8 In most cases the management unit equates to the veterinary business (or practice). However there are a number of situations where an administrative services business provides direct services to a veterinary business. In these cases, the administrative service business and the veterinary business are combined to form the practice.

PRACTICES CEASED DURING THE YEAR

9 A number of practices ceased operations during the 1999–00 reference period. It is normal ABS procedure to include the contributions of these practices in the survey output.

REFERENCE PERIOD

10 Data contained in the tables of this publication relate to all veterinary services practices which operated in Australia at any time during the year ended 30 June 2000. Counts of practices include only those practices that were operating at 30 June 2000.

RELIABILITY OF DATA

11 The estimates presented in this publication are subject to sampling and non-sampling error.

12 The estimates in this publication are based on information obtained from a sample of businesses in the surveyed population. Consequently, the estimates in this publication are subject to sampling variability, that is, they may differ from figures that would have been obtained if all units had been included in the survey. One measure of the likely difference is given by the standard error (SE), which indicates the extent to which an estimate might have varied by chance because only a sample of units was included.

13 There are about two chances in three that a sample estimate will differ by less than one SE from the figure that would have been obtained if a census had been conducted, and approximately 19 chances in 20 that the difference will be less than two SEs.

14 Sampling variability can be measured by the relative standard error (RSE) which is obtained by expressing the SE as a percentage of the estimate to which it refers. The RSE is a useful measure in that it provides an immediate indication of the percentage errors likely to have occurred due to sampling, and this avoids the need to refer also to the size of the estimate.

15 The following table contains estimates of RSEs for a selection of the statistics presented in this publication.

RELATIVE STANDARD ERRORS, for Table 1 - Key Figures

RSE %

Practices at end June 2000

Sole Proprietors or partnerships

7.3

Incorporated companies

7.5

Trusts

15.3

Total

2.0

Locations at end June 2000

Capital City

6.3

Other

8.1

Total

3.7

Employment at end June 2000

Veterinarians

4.6

Other

4.3

Total

3.9

Income

Professional Services

4.4

Sales of merchandise

7.2

Other Income

10.4

Total

4.2

Expenses

Labour Costs

4.3

Payments to other businesses for professional services

14.4

Purchases

5.4

Other expenses

4.4

Total

4.2

Return per practitioner

5.6

Operating profit before tax

8.9

Operating profit margin

7.3

Industry value added

4.4

16 As an example of the above, an estimate of total income for the veterinary services industry is $993.9 million and the RSE is 4.2%, giving a SE of $41.7 million. Therefore, there would be two chances in three that, if all units had been included in the survey, a figure in the range of $952.2 million to $1,035.6 million would have been obtained, and 19 chances in 20 that the figure would have been within the range of $910.5 million to $1,077.3 million (i.e. a confidence interval of 95%).

17 Errors other than those due to sampling may occur because of deficiencies in the register of units from which the sample was selected, non-response and imperfections in reporting by respondents. Inaccuracies of this kind are referred to as non-sampling errors and they may occur in any collection, whether it be a census or a sample. Every effort has been made to reduce non-sampling error to a minimum by careful design and testing of questionnaires, efficient operating procedures and systems, and appropriate methodology.

ACKNOWLEDGEMENTS

18 ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated; without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.

GLOSSARY

Bad and doubtful debts

Bad and doubtful debts is the amount of accounts receivable that are either written off, or estimated to be uncollectable during an accounting period, that are expensed in a period's profit calculations.

Capital city

Capital cities are Sydney, Melbourne, Brisbane, Adelaide, Perth, Hobart, Canberra and Darwin and all suburbs of these cities

Casual employees

This item refers to employees not entitled to take paid holidays. .

Depreciation and amortisation

Depreciation and amortisation are financial charges made in the accounts to reflect that part of the value of the asset which may be regarded as having been used up in producing revenue in a particular accounting period.

Employees

This item includes working directors, and other employees working for a business during the last pay period in June. Employees absent on paid or prepaid leave are included. This item excludes working proprietors and partners of unincorporated businesses.

Employer contribution to superannuation funds

Includes all employer contributions to superannuation schemes (including the employer productivity contribution).

Employment at end June

This item includes working proprietors and partners, working directors, and other employees working for a business during the last pay period ending in June 2000. Employees absent on paid or prepaid leave are included.

Full-time employees

Employees who work 35 hours per week or more.

Industry value added

This item represents the value added of the industry to the economy and is calculated as the sales of goods and services plus government subsidies and changes in levels of trading inventories, minus purchases of goods and selected expenses.

Interest expenses

This item includes interest on bank loans, loans made from related as well as unrelated businesses/organisations, and interest in respect of finance leases, interest paid to loans from partners, interest equivalents, such as hedging costs, and expenses associated with discounted bills. It excludes bank charges and capital repayments.

Interest income

This item includes interest from deposits in banks and non-bank financial institutions, loans and advances made to other businesses, interest on finance leases, and earnings on discounted bills. It excludes capital repayments received.

A location is a physical site from which the veterinary practice provides services on a relatively regular basis.

Main occupation

The main occupation/activity of persons working for the business during the last pay period ending in June 2000.

Operating profit before tax

A measure of profit (or loss) before extraordinary items are brought to account and prior to the deduction of income tax and appropriation to owners. It is derived as total income minus total expenses, plus closing inventories minus opening inventories.

Operating profit margin

Operating profit margin of a business represents that percentage of its sales of goods and services which become profit after all operating expenses have been deducted. It is derived by expressing total operating profit before tax (OPBT) as a percentage of total sales of goods and services (i.e. OPBT*100/Sales of goods and services).

Other contract, sub-contract and commission payments

This item includes payments to other businesses and self-employed persons for work done or sales made on a contract or commission basis (including payments to practitioners for which PAYE tax has not been deducted).

Other income

This includes net profit (loss) on the sale of non-current assets, net profit (loss) on foreign loans as a result of variations in foreign exchange rates/transactions, net profit (loss) on share trading and dividend income. It excludes extraordinary profit (loss), i.e. not associated with the normal operations of this business and of a non-recurring nature.

Other insurance premiums

This item includes optional third-party and comprehensive motor vehicle insurance premiums, fire, general, accident and public liability and income maintenance insurance premiums.

Other operating expenses

This item includes various expense items which are general in nature and are not included elsewhere, e.g. electricity and gas charges, advertising expenses, accounting fees, repair and maintenance.

Other purchases

This item includes veterinary supplies and purchase of non-capitalised equipment. It excludes contract, sub-contract and commission expenses, capitalised purchases, and parts and fuel for motor vehicles.

Other sales of merchandise

This item includes the sales from other finished goods for resale.

Part-time employees

Employees who work less than 35 hours per week.

Permanent employees

These include all employees, full-time or part-time, who were entitled to paid holidays or leave pay.

Professional indemnity insurance

Insurance payments made to provide a level of indemnification for professional practice. In many instances these expenses are met directly by the employed practitioner and not paid by the business and therefore will not be contained in the reported business expense.

Professional services

Veterinary practices derive their main income from the provision of professional services including vaccination, dentistry and other veterinary services.

Purchases

This item includes goods and medications for resale, veterinary supplies and purchase of non-capitalised equipment. It excludes contract, sub-contract and commission expenses, capitalised purchases, and parts and fuel for motor vehicles.

Rent, leasing and hiring expenses

Rent, leasing and hiring expenses are the costs for the rent, leasing (excluding finance leases) and hiring of vehicles, land, buildings, structures, machinery, equipment and any other property from other businesses or individuals.

Rent, leasing and hiring income

This item refers to income received from the renting, leasing or hiring of assets such as land, buildings, vehicles, machinery or equipment to other businesses or individuals.

Return per practitioner

This item is the sum of the operating profit before tax of practices and wages and salaries paid to practitioners, divided by the number of practitioners working for practices in the industry.

Telecommunication expenses

Includes telephone charges, facsimile charges, and Internet charges.

Wages and salaries

This item refers to payments accruing to all employees during the financial year including provisions for employee entitlements, severance, termination and redundancy payments. Drawings by sole practitioners/partners are excluded.

Workers' compensation costs

Workers' compensation is a compulsory insurance cover to be taken out by all employers, except self-insured workers, according to legislative schemes to cover employees suffering injury or disease in the course of or arising out of employment.